Chapter 10 Resource Management

Objectives Human Resource Management Capital Resource Management Managing the Resource Profile

Human Resources As a project manager you know your most critical resource is your people. Of the three resources (money, time, and people), people will demand the most attention. The Human Resource Challenge Today: Project managers are turning to contract employees managed by the contracting company that supplies them because of cost. Direction: Keep the team focused. Tangential issues absorb time, money, and energy of the team. Guidance: Coach your people along. Support: Back your team. Encourage creative thinking. Encouragement: Cheerleading for cohesiveness. Cost of Human Resources: You should need two people before you hire one because of the cost of benefits (insurance, retirement, training, and support).

The Capital Resource Direct (variable) Costs: costs that vary directly with your volume of output, including labor wages, overtime premium, materials, and sales tax. Indirect (fixed) Costs: fixed periodic costs including insurance, start up, utilities (HVAC, lighting), and security. Duration and Cost (fig 10-1, page 207): 1. Normal Point: Point of least direct cost. 2. Fully Crashed Point: Point of shortest duration. Criteria to select activities to crash: 1. Must be on critical path – will shorten project duration. 2. Precedes multiple activities – bottlenecks numerous activities. 3. Long duration – more potential time gain from crashing. 4. Lower cost – low skill or resources that are sitting idle. 5. Sunshine Rule – if it is early in the project and you fail, you still have recovery time. 6. Labor intensive – low skill is easy to add people. 7. Subject to common problems – lowers exposure to having future problems. Time/Cost Tradeoff Analysis: Fig 10-2, page 208. The optimum duration yields the minimum total cost.

Managing the Resource Profile A project’s resource profile describes the rate at which resources are consumed over time (fig 10-3, page 210). Some typical resources that exhibit erratic profiles are: staffing levels, consumption of funds, equipment use and the need for travel. Profile management tools: The key to leveling resource profiles is to shift work from the peaks to the valleys by rescheduling activities. Avoid any changes to activities on the critical paths. Activities not on the critical path afford us the opportunity to level resource requirements since they have some slack. Total slack(TS): the amount of time an activity can be delayed without delaying the finish date of the project. Free slack (FS): the amount of time an activity can be delayed without delaying its successor tasks.

The Final Plan Resource leveling should be performed after the optimum duration is found, and the project’s duration is brought within the expected deadlines. Once resource levels are satisfactorily leveled, the CPM network is to be redone, and both forward and backward pass calculations are performed. One last review for reasonableness is performed before the plan is considered firm and is presented for final approval.

Summary As a project manager you know your most critical resource is your people. Of the three resources (money, time, and people), people will demand the most attention. Cost of Human Resources: You should need two people before you hire one because of the cost of benefits (insurance, retirement, training, and support). Direct (variable) Costs: costs that vary directly with your volume of output, including labor wages, overtime premium, materials, and sales tax. Indirect (fixed) Costs: fixed periodic costs including insurance, start up, utilities (HVAC, lighting), and security. Time/Cost Tradeoff Analysis: The optimum duration yields the minimum total cost. Activities not on the critical path afford us the opportunity to level resource requirements since they have some slack. Resource leveling should be performed after the optimum duration is found, and the project’s duration is brought within the expected deadlines.

Home Work 1. What are the 3 resources a project manager requires and what is the most critical resource? 2. Explain the two types of costs: direct and indirect (fixed). 3. Explain optimum duration of a project. 4. What activities afford us the opportunity to level resource requirements?